US$50 bil loan: Msian govt not that stupid

comments     Jeffrey     Published     Updated

I refer to the malaysiakini report Posers over US$50 bil loan for 9MP . The report is highly unlikely to be true for the following reasons.

First, the Malaysian government may not be of the top rating in international financial markets but with the last resort of EPF's huge coffers and Petronas (whose consolidated accounts, for 2005 and 2006 alone, has an Ebitda amounting to some US$39.38 billion not to mention the profits of earlier years and investments offshore), it cannot be so cash-strapped as to want to borrow money (for a legitimate purpose of funding the 9th Malaysia Plan) through financial intermediaries such as Roland Bleyer's Union Financial Services Corporation.

This is specially so when financial capital markets of the world require dealings by governments to be transparent, and the Malaysian government cannot be that stupid to risk its credibility within financial capital markets for such a deal.

Secondly, banks - especially foreign banks - have internal and external auditors and have to account to their shareholders. There is no way they will lend to Asasatu Technology Sdn Bhd which is in the process of winding-up. For to do so - even if Asasatu were a front for the Malaysian government - will violate every tenet of prudent credit.

Not even the Malaysian banks will do that because our company laws will not permit an insolvent company to borrow monies, and lenders do so at their own peril of not being able to recover a cent because the transaction may become void. It is entirely inconceivable that Bank Negara, regulator of banks, will direct any bank to lend under such circumstances.

Thirdly, it must be asked who (other than regulated banks, which have just been discounted) would ever lend such a sum of US$50 billion based on 2.88% to 3.5% interest rate as stated in the letter dated Feb 22, 2006, purportedly from Project Equity Services Group to the PM and Bank Negara's governor?

Even organised crime and money launderers know how to count in that they can get a better yield of approximately 4.8% for lending to the US government via subscription of its treasury bills. It is shocking to suggest that the Malaysian government has better credibility than the US government in being able to get a finer and reduced rate of 2.88% to 3.5%!

Fourthly, all speculations that Singapore is using intermediaries or proxies to finance - for the sake of quid pro quo - political and strategic interest in air space, sand, water supply or facilities in the Southern Corridor have no basis or credibility. After the crooked scenic bridge episode, there's no way it can get either sand or air space. As for the Southern Corridor, we welcome Singaporeans with open arms.

Besides Singapore finances through Temasek, a listed GLC and there's no way it lends money directly, much less lend US$50 billion that exceeds by twice its shareholders funds, constituting one quarter of Singapore's total reserves. Its risk appetite is at an all time low. It was reported recently that Prime Minister Lee Hsien Loong had said that Temasek (even though led by his wife Madam Ho Ching) should be accountable for the loss of US$2 billion from the ill- conceived US$3.8 billion acquisition of former Thai prime minister Thaksin Shinawatra's stake in Thai telco, Shin Corp.

I suggest to you that Khazanah, our Ministry of Finance and our central bank just cannot be so dumb as to fall for what appears to resemble a typical Nigerian scam. I suggest to you that in Bolehland, it is after all easy to bribe a clerk to steal letterheads from any office or government department or even affix a seal or a rubber stamp (that can be made for RM5). The rest is just a case of forging the signatures and distributing copies of it via the Internet.

Who has verified the authenticity and signatures of the letters mentioned in the report? The story first originated from one Ganesh Sahathevan, was blown up by blogger Raja Petra Kamaruddin of Malaysia Today and picked up by Opposition Leader Lim Kit Siang. But who is Ganesh Sahathevan?

Even if the story carried were not true (as I suspect it is), such a report will impact on the credibility and integrity of our government leaders and state institutions like the central bank. It will also lead to the irresistible inference that our online blogs and media are irresponsible to publish that which they have not first verified by scrupulous due diligence proportionate to the gravity of the allegations.

In the interest of the nation and as a counterweight against the pro-government stance of licenced mainstream media, the Internet's blogs and online media like malaysiakini are indeed the last bastions to ferret out falsehood and defend the truth.

Let it be said that we cannot serve such a cause if we follow a herd instinct and rush to publish material that we have not done scrupulous due diligence and verification, committing the very sin of disseminating misinformation that we accuse the government's media of and squandering in the same process, our moral and credibility capital in respect of publication of the truth. In turn, opening the way for a government clamp down based on this very same justification.

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